Question

Discuss the role(s) of commercial banks in our economy.

Answer 1

Commercial banks help in economic development by following the monetary bank policies and acting as a driver for economic growth.

Commercial bank helps in mobilising saving through a network of branch banking. They help in providing people with a variety of deposit schemes to individuals which suits their needs.

Commercial banks also helps in financing the industrial sector by providing them with a variety of short term and long term loans .They also provides with hire purchase loans.

Commercial banks also help in financing both internal and external trade.The banks provide Loans to retailers and wholesalers to deal with goods they are related. Commercial banks also provide with loan related to agricultural sector.

Commercial banks also help in financing various consumer related activities .They provide with EMI to buy daily household needs and other short term needs.

Overall we can say that commercial banks are the backbone of the economy and central banks with association with them regulate the whole demand and supply in an economy.